Inside Access into Freight Brokering: An inefficient business ripe for change
Core to the vision of Fr8 Network is building a best-in-class digital brokerage for the domestic trucking industry. I had an opportunity to shadow an experienced freight broker who was willing to provide me with inside access and insight into his job. Freight brokering is an industry that profits from keeping its data and relationships private, so I was thankful to meet a broker from one of the biggest brokerages in the US to see how Fr8 Network will revolutionize the future of his job and industry.
Admittedly, I was skeptical about how informative and transparent this meeting would be, so I was surprised to be greeted by a cheerful, chatty, young guy with scruffy facial hair working from a LA loft in the Arts District. Clearly used to the “work-from-home” lifestyle, Patrick (not his real name, but I’ll keep that confidential) was in a pair of cutoff black jean shorts and a black t-shirt.
Patrick’s home office is modest. Tucked away in a corner of his open-floor-plan apartment he shares with two other people is a glass-top desk with two monitors; a few days a week the space transforms into a meditation and wellness meetup. The battlestation was equipped with a dangling headset draped lazily off the edge of the desk and the software windows oddly arranged such that the middle of the window was split between the two monitors.This is the setup of someone who has been moving freight for 11 years at one of the largest trucking brokerages in the US. In his prime, he was pulling in over $200k a year matching shippers with carriers in his rolodex.
Trucking freight brokering peak hours are 7:30–15:00 EST (everything is in military time). Because he’s on the west coast, Patrick wakes up at 4:15AM daily to get started. A backlog of loads are on his screen — tables and rows arranged just how he likes it. A single quick glance at a record tells him if it’s a good candidate for a match or not. Watching him work was exhausting. The flurry of keystrokes as he entered data, updated impatient and eager colleagues and blasted emails kept my eyes glued to the monitor. This is how I imagined stock brokers and day-traders worked before quants took over.
To an outsider and someone who appreciates good software design, the program I was looking at seemed to have been left in the 90s. Although working very effectively — quick to serve data and minimal loading times between screens — the UI could use a lot of love. And I mean a lot. The risk of inputting a date incorrectly through an accidental keyboard press unnerved me, but I’ve long since forfeited the assumption that modern UI and UX has penetrated the logistics industry. I mentally attribute his skill using the tool to having 11 years behind him.
In-between messages fired off on the chat program, Patrick talks me through what he’s doing. Someone needs to know if he has a truck available for an 8PM pickup in a town nobody has heard of outside Philadelphia. Proudly, Patrick notes his intimate knowledge of US geography gained through booking trucks his entire young adulthood. Another flurry of disorienting keystrokes and some button-presses later, Patrick points (seemingly) arbitrarily at the screen and say he has a match for his colleague.
In this fast-paced business I wasn’t given enough time to ask what he just pointed to, but nonetheless he was happy to have managed to find something so rare — a driver available for a night grab and morning delivery.
After a while I gave up trying to mentally note the problems I had with the design of his software tools and just listened. As he walked me through his decision-making process I was amazed by the personal care and attention required to do his job effectively. Patrick manages 15 carriers which collectively own about 10,000 trucks.
His brokerage is split between two “houses” — shippers and carriers. The shipper house keeps relationships and grabs loads from manufacturers and distributors around the US. It’s the responsibility of the carrier house to find trucks to haul the freight; hence the constant flood of emails and messages back and forth on the chat window.
When presented with a load, Patrick has to use his tools and most importantly, his intuition, to find a good match. His tools, when regularly updated, tell him when his network of trucks will be available for another load. His intuition tell him if that driver would be willing to take the job.
Picking up the phone, he dials the dispatcher to tell him he found a load for his driver. A verbal agreement is made and Patrick drafts an email sending off a rate confirmation sealing the contract. The standard acknowledgment response to the emails and messages sent between these people? 10–4.
Only after the confirmation is sent does Patrick see his “cut” from the deal — $35. His brokerage takes a percentage to pay for “overhead,” then the remaining profit goes three ways — 72% to the brokerage company and 26% split between Patrick and his shipper house counterpart. Patrick negotiated a 30% markup on the load this time. He says he averages 250 loads per month at that range of $35, bringing his commission-based salary to about $12k monthly.
Over lunch we talked back and forth about the vision of Fr8 Network and reasons I think his job will be completely changed once we’ve succeeded. One interesting conversation dug into the nuance of booking a load in Atlanta, my hometown. Patrick described how not all locations are the same — a haul out of Savannah, GA compared to a haul out of Atlanta, GA would lead to completely different answers from drivers even given the same price for the load and a shorter driving distance. Apparently Atlanta is a nightmare to navigate.
The discussion lead to preferences of users. How each driver is unique to what they want out of the job. Some prefer the more lucrative long-haul jobs. Ones where they are on the road 5–6 days a week. Some prefer to return home every weekend. Some refuse to do loads for certain companies, or even industries. I saw one note on a driver profile indicating they don’t haul beer because it takes too long to load onto the trailer.
Examples like these and countless others throughout my time with Patrick helped validate the need for Fr8 Network services to incorporate extensive application of big data — poorly suited use cases of blockchain databases. Without it, drivers will be increasingly frustrated with the loads that are offered to them through digital tools like apps. Just because a computer decided a driver would be a good fit based on price, distance, and available time left for legal driving doesn’t mean the driver would want the job. If a digital brokerage cannot incorporate the unique needs of its clients, it is doomed for failure.
Finding loads that work for the drivers is one challenge. A whole new set of issues arise once the load needs to be tracked. At Patrick’s giant brokerage, a 100-person dedicated team is in place gathering updates on in-transit freight. The 6000 loads his company brokers daily demand this, as shippers and consignees alike want to know where their goods are and whether they will arrive on time.
For certain loads, like those carrying produce, it is more essential to have complete track and trace. The CDC estimates 48 million people (1 in 6 Americans) get sick, 128,000 are hospitalized, and 3,000 die each year from food-borne diseases. Because of this, the Food Safety and Modernization Act was signed into law in 2011.
A full 7 years later and the FSMA is still not fully enforced, evidence to the challenge of bringing change to the logistics industry. Efforts are underway to change this, including Walmart requiring leafy-green producers in their supply chain to join their blockchain network by 2019. The expectation is that if a recall for consumer safety needs to occur, the time needed to accomplish this will be reduced from the current days to mere seconds.
The team and I at Fr8 Network have a long journey ahead of us. Our project is ambitious and profoundly game-changing. There will be political battles against ego-driven incumbents in the industry, convincing stories of time and effort saved, and likely powerful tales describing how transparent trade saved lives in a disaster.
I want to thank Patrick for opening his job to us in such a refreshing and accommodating way. Certainly these middlemen will be around much longer than the blockchain community will admit, as brokers’ value in this industry cannot be understated.
At the end of our time together, we ventured to the peak of Mt. Washington to meditate. The reward for starting his day at 4:30AM is a 2PM cut-off for his responsibilities. An avid mediator since January, Patrick fills me in on his passion for the practice he has developed for the last 10 months. After a stressful daily grind of quick wins and closely missed loads, meditation and self reflection refreshes and prepares him to wake up tomorrow and do it all again.
We got back to the apartment after our hike before most would have even closed their laptops to head home in San Francisco. He checked his email one last time before I left. In the inbox was an urgent string of emails requesting his attention. The rare load he had excitedly booked earlier was a duplicate and would demand that Patrick call and apologize profusely to the dispatcher. Unfortunate and damaging to his relationship, Patrick takes a few deep breaths and explains that it happens quite often.
